Time New York: Mon 11 Dec 09:55 am  |  Save 15% on H&R Block Online

  
caticonslite_bm_alt

Amazon (AMZN) May Sell Drugs if Reports Are to be Believed

Zacks

Amazon.com Inc. AMZN can no longer be identified as just a retail giant. Always aiming to innovate, the company now plans to explore the new territory of prescription drugs. Reportedly, the e-commerce giant is trying to figure out a way to break into the multi-billion-dollar healthcare industry.

Let’s take a look at what Amazon has been doing to enter this space.

Coming to the share price, Amazon has underperformed the industry it belongs to on a year-to-date basis. The company’s shares have gained only 55% compared with the industry’s growth of 58.1%.


What Is Amazon Doing?

Citing sources, CNBC reports that Amazon has already been in talks with pharmaceutical company Mylan and the Sandoz division of Novartis. Both these produce a wide range of generic drugs.

In May, CNBC had reported that the company would be hiring a business lead to assist in this process, and is preparing to enter the pharmacy market, especially since the broader healthcare market could undergo serious change soon.

Soon news spread that Amazon had acquired pharmacy licenses in a dozen states. Although the company at that time had said that it did so to sell medical supplies, this definitely does also enable Amazon to sell drugs down the line, if it wishes to.

According to an analysis by Adam Fein, president of Pembroke Consulting, selling prescription drugs is a big business in the United States given that the retail pharmacy is a $400 billion industry.

Therefore, if Amazon succeeds in penetrating the market, it is sure to benefit and give other pharmaceutical companies stiff competition.

Bottom Line

Amazon has already created ripples in a number of industries, namely book buying, retail shopping, groceries and Hollywood, using fierce customer loyalty and enormous reach. Its cloud business, Amazon Web Services, has been a key growth driver in recent times. Now, the fight for healthcare technology dollars is on and Amazon along with other tech biggies like Microsoft MSFT, Alphabet GOOGL and Apple AAPL has targeted it in its own way.

Talking about Amazon, the company already sells medical supplies and equipment like blood pressure monitors, braces, hearing aids, and even walkers and wheelchairs in the United States. Entering the pharmacy industry does seem like a natural and lucrative next step for the company. However, it’s remains unclear if Amazon would sell drugs to consumers or just act as a drug wholesaler.

That said, it is for sure that even if Amazon enters this market, tasting success would not be that easy. The company might face major challenges related to government regulations and patient privacy requirements, which differ from typical retail.

Therefore, the e-commerce giant might need to device some serious strategies in order to foray into this industry and then stay there for long. The company might also need to acquire smaller established brands in this space. It could also partner with insurers or employers to give their customers a better deal.

Amazon has a long way to go. For now, we need to wait and watch how it plays its cards.

Zacks Rank

Amazon currently carries at a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks’ Best Private Investment Ideas

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.

Click here for Zacks' private trades >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research
<-- You can share this post with your network,
or give us your opinion and leave a comment.
Be sure to check our RSS feeds for updates.